Tax Consequences Of Over Contributing Into Your RRSP

Over contributing into your RRSP (Registered Retirement Savings Plan) is not a good idea from a tax point of view. Your limit of RRSP is usually mentioned on your latest Notice of Assessment from the  Canada Revenue Agency (CRA). When you over contribute into your RRSP, it has following tax consequences:

·         Tax deduction for contributing to your RRSP will be only up to the limit mentioned by CRA

·         If your over contribution exceeds limit by $2,000, you may be liable for an over contribution penalty @ 1% per month plus interest and penal consequences

If however, over contribution is done and you have a home buyer plan repayment or Life Long Learning Plan repayment, you should designate the over contributed amount in order to avoid such penal consequences

The Last for RRSP Contribution for 2015 is February 29, 2016